Lonestar Resources US (NASDAQ:LONE) and Earthstone Energy (NYSE:ESTE) are both small-cap oils/energy companies, but which is the superior stock? We will compare the two businesses based on the strength of their risk, dividends, institutional ownership, valuation, analyst recommendations, profitability and earnings.

Profitability

This table compares Lonestar Resources US and Earthstone Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Lonestar Resources US -38.32% -3.88% -1.08%
Earthstone Energy 5.33% 2.75% 2.35%

Analyst Recommendations

This is a summary of recent recommendations and price targets for Lonestar Resources US and Earthstone Energy, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lonestar Resources US 0 0 5 0 3.00
Earthstone Energy 0 0 8 0 3.00

Lonestar Resources US currently has a consensus target price of $11.63, suggesting a potential upside of 122.70%. Earthstone Energy has a consensus target price of $12.50, suggesting a potential upside of 118.91%. Given Lonestar Resources US’s higher possible upside, equities analysts plainly believe Lonestar Resources US is more favorable than Earthstone Energy.

Volatility and Risk

Lonestar Resources US has a beta of 2.38, suggesting that its stock price is 138% more volatile than the S&P 500. Comparatively, Earthstone Energy has a beta of 1.97, suggesting that its stock price is 97% more volatile than the S&P 500.

Insider & Institutional Ownership

52.0% of Lonestar Resources US shares are held by institutional investors. Comparatively, 20.6% of Earthstone Energy shares are held by institutional investors. 2.3% of Lonestar Resources US shares are held by company insiders. Comparatively, 64.4% of Earthstone Energy shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Lonestar Resources US and Earthstone Energy’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Lonestar Resources US $94.07 million 1.37 -$43.48 million ($0.42) -12.43
Earthstone Energy $108.08 million 3.38 -$12.51 million $1.43 3.99

Earthstone Energy has higher revenue and earnings than Lonestar Resources US. Lonestar Resources US is trading at a lower price-to-earnings ratio than Earthstone Energy, indicating that it is currently the more affordable of the two stocks.

Summary

Earthstone Energy beats Lonestar Resources US on 10 of the 13 factors compared between the two stocks.

Lonestar Resources US Company Profile

Lonestar Resources US Inc., an independent oil and gas company, engages in the acquisition, development, and production of unconventional oil, natural gas liquids, and natural gas properties in the United States. The company primarily focuses on Eagle Ford Shale properties in Texas counties. Lonestar Resources US Inc. was incorporated in 2015 and is headquartered in Fort Worth, Texas.

Earthstone Energy Company Profile

Earthstone Energy, Inc., an oil and natural gas development and production company, operates in the up-stream segment of the oil and natural gas industry in the United States. Its asset portfolio includes the Midland Basin of west Texas and the Eagle Ford trend of south Texas. As of December 31, 2017, the company operated 91 gross Eagle Ford wells; and 12 gross Austin Chalk wells, as well as had 79,976 thousand barrels of oil equivalent (MBOE) of total proved reserves, 19,961 MBOE of proved developed reserves, and 60,015 MBOE of proved undeveloped reserves. Earthstone Energy, Inc. was founded in 1969 and is headquartered in The Woodlands, Texas.

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